Latest news with #MIC25
Mint
4 days ago
- Business
- Mint
Ajit Ranade: The success of ‘Made in China 2025' alarmed the West
An after-effect of the global financial crisis of 2008 was that by the following year, China's exports dropped by 16%. This led to widespread factory closures and mass layoffs in provinces like Guangdong. China's prosperity had been built on the large-scale export of low-cost, labour-intensive manufactured goods for three decades. The crisis exposed the vulnerability of that strategy and overdependence on Western markets. Also, China was stuck in low-end assembly roles in global supply chains, with low value addition. Undoubtedly, its economic reforms from 1978 onwards made it possible for 300 million workers to move from rural and agricultural livelihoods to higher paying industrial and urban jobs. But 2008 was a rude reminder of several weaknesses. Real wages had not grown much. As a result, consumption spending was stuck at just 35% of GDP even as late as 2009. Domestic demand could not pick up the slack caused by falling external demand. Also Read: Kaushik Basu: Redefine prosperity; GDP tunnel-vision could prove costly In 2009, Chinese policymakers responded with a 4 trillion renminbi stimulus, with big spending on infrastructure. This restored growth to 10% next year, but also led to industrial overcapacity in sectors like steel and cement, and reinforced the dominance of state-led investment. Consumption was not picking up even as deflationary pressures were building, while state-owned enterprises were struggling, plagued by overcapacity. This in turn caused a debt explosion. China's debt has grown from 150% of GDP in 2008 to about 280% now. A real estate over-build-up made a crisis in this sector imminent, as was later demonstrated by the fall of Evergrande. This was the backdrop to Beijing's launch of 'Made in China 2025' (MIC25) ten years ago. By 2013, the new regime under President Xi Jinping had recognized the need for supply-side reforms by cutting overcapacity, addressing the consumption-export imbalance and reviving industrial growth with innovation and value addition. Also Read: China began de-risking its economy well before Trump's trade fury Partly inspired by Germany's Industrie 4.0, MIC25 aimed to upgrade Chinese manufacturing to high value addition and less dependence on foreign technology. It also aimed for technological self-sufficiency and domination of emerging high-tech sectors, and sought to promote indigenous innovation and green as well as smart manufacturing. It targeted 10 sectors, including aerospace, advanced rail-transport equipment and new energy vehicles, and aimed to raise the domestic content in high-tech industries to 70%. This industrial policy was focused on picking champions, channelling vast state subsidies, and guiding credit and support to chosen sectors from preferential government procurement. The West was unhappy, viewing MIC25 as mercantilist and violative of WTO norms as well as non-market driven. There were concerns about forced technology transfer and cyber theft. Unsurprisingly, when US President Donald Trump assumed office for his first term, he slapped punitive duties, put in export controls and investment screening. The EU followed suit in trying to decouple from China. Also Read: The time is right for a reset of India's trade ties with China Fast forward to 2025. There are now several independent assessments of MIC25. Of these, two major studies were commissioned by the American Chamber and European Chamber of Commerce. What emerges is that MIC25 has been a success and has led to a spree of backlash actions, such as this year's Trump tariffs. China now accounts for 30% of value added in global manufacturing, ahead of the US, which accounts for 16%. China's BYD dominates electric vehicles (EVs), while Huawei leapt ahead in 5G telecom and AI hardware. China is a leader in shipbuilding, batteries, solar power, turbines, drones, consumer electronics and pharmaceutical ingredients. DeepSeek's AI leap was a wake-up call to those enamoured by OpenAI's ChatGPT. The recent price slash by BYD shook the global EV industry. It sells more vehicles than Tesla in the EU despite higher tariffs. China now has more robots per 10,000 workers than Germany, according to a Financial Times report. Import dependency has reduced and foreign companies are incentivized to localize production. EVs, high speed rail, industrial robots, 5G and renewable energy are China's success stories, while it faces challenges in semiconductors, aerospace and biomedicine. The FT report notes that even now, Chinese aircraft are simply 'western aircraft with Chinese metal on them." Other risks are its huge EV and solar overcapacity, apart from the global backlash of tariffs and sanctions led by US actions. Hence, MIC25 has been repositioned and folded into a broader framework called 'new quality productive forces." Also Read: How Trumpian volatility is forcing policy changes in China At the rate it is going, China's share of valued addition in manufacturing could go up to 50% in the next 5-10 years. How this Cold War 2.0, which may see the US decouple from China, plays out is anybody's guess. China is also investing in trying to win the war of narratives and perception by describing its alternate development path. But initiatives like its Belt and Road plan have only met with limited success. China also cannot ignore some core and persistent vulnerabilities, including low domestic consumption demand, an ageing demography as well as a peaking labour force, rising unemployment, slowing growth and ballooning debt. Added to this is its increased friction with the Western world and barriers denying its exports access to markets in the West. The success of MIC25 cannot hide these related risks and challenges. The author is senior fellow with Pune International Centre.
Yahoo
11-02-2025
- Business
- Yahoo
Commentary: Why does the success of Chinese AI invention DeepSeek elicit fear?
The artificial intelligence boom led by American tech bros needed one instance of serious competition from China, namely DeepSeek, to shiver in fear and lose $94 billion of wealth in a single day. This cannot be because the AI industry is afraid of more players entering the game. There is already healthy competition among prominent AI companies such as Amazon, Google, Meta and OpenAI — all of which are U.S.-based. Could it be because of DeepSeek's performance? Probably not, because initial experiments show that DeepSeek's performance for most users is on a par with ChatGPT. But again, Gemini and Claude are also on a par with ChatGPT so this is not new either. If DeepSeek offers good value at a reasonable price and was developed using significantly fewer chips and is more efficient to run, resulting in a reduced environmental impact, shouldn't we all be happy? Perhaps what makes DeepSeek different is that it came from China. If we believe in free markets and the survival of the most efficient processes, it is only fair to consider DeepSeek a success story in technology, business and long-term vision. However, because of DeepSeek's country of origin, some fail to see it as a success story. This is a clear violation of modern sensibilities regarding respect for others and their achievements and demonstrates traces of conspiracy theories that will ultimately backfire and hinder the success of the American technology sector. As long as China is seen as an enemy on all fronts, and not a successful competitor in the technology sector with long-term vision and plans, the American tech sector will fail to recognize its own flaws and shortcomings. China has shaped its foreign policy strategy toward the U.S. primarily around technological competition. Unlike Russia, which prioritizes military capabilities, or the European Union, which focuses on economic rivalry, China sees technology as its key battleground. And to their credit, when exploring the facts rather than rhetoric, it is evident that China is executing this strategy efficiently and deliberately. For example, China's investment in technology infrastructure has increased significantly since 2013, when the Made in China 2025, or MIC25, initiative was adopted. MIC25 is a 10-year ambitious plan aimed at catapulting China into a global leader in high-tech industries by reducing reliance on foreign technology and developing 10 high-tech industries such as AI, advanced robotics, telecommunication and aerospace engineering. As such, DeepSeek's success should be seen as part of a much bigger trend that will challenge the U.S. and its technology sector in the next few years. Reflecting only the perspective of technology development, whether the Chinese developers used sanctioned Nvidia chips or employed ChatGPT's design and content to train DeepSeek are both secondary. Especially given that OpenAI, Amazon, Meta, X and other American AI developers do not have clean legal, social and environmental records either. Furthermore, ethical standards of American AI companies — especially in terms of used sources, transparency and reliability — have been questioned for a long time, but until now not much has changed, as demonstrated by the ongoing New York Times lawsuit against OpenAI. From a business and financial point of view, losing clientele to DeepSeek should be investigated systematically with a view to understanding user needs, and scapegoating will never help this process. Indeed, antagonizing the competition prevents U.S. companies from learning from their mistakes. The point that matters the most about DeepSeek's success is that it is much cheaper, uses less energy and offers open model architecture and open weights — both of which are treated as trade secrets in systems like ChatGPT and Gemini. To better understand DeepSeek and China's success from a technology perspective, let's consider a technology that was championed in the U.S., namely the internet. In the 1970s and 1980s, networking technologies were being developed globally, but many were proprietary and costly, such as France's Minitel system, which provided services such as online banking and shopping before the internet. However, the U.S. Department of Defense (through DARPA — Defense Advanced Research Projects Agency) pioneered Transmission Control Protocol/Internet Protocol, known as TCP/IP, which became the foundation of the modern internet. Unlike the proprietary systems, TCP/IP was openly shared and freely modifiable, enabling rapid adoption, innovation and decentralization. This openness led to the explosive growth of the internet and allowed U.S. companies — such as Cisco, Microsoft and later Amazon and Google — to dominate the digital economy. One might interpret the success of TCP/IP as part of a conspiracy, a manifestation of American hegemony and military ambitions, suggesting it was part of a long-term plan to dominate and manipulate global communications. However, from a history of technology perspective, TCP/IP represents a remarkable success story, which was developed by visionaries. Indeed, developers of TCP/IP had a clear vision and worked hard to turn it into an international success. DeepSeek, too, is a technological success story and should be understood in this light. Only then can the American technology sector learn from its mistakes and the competition, and succeed. ____ Mohammad Hosseini, Ph.D., is an assistant professor in the Department of Preventive Medicine at Northwestern University's Feinberg School of Medicine. ____
Chicago Tribune
05-02-2025
- Business
- Chicago Tribune
Mohammad Hosseini: Why does the success of Chinese AI invention DeepSeek elicit fear?
The artificial intelligence boom led by American tech bros needed one instance of serious competition from China, namely DeepSeek, to shiver in fear and lose $94 billion of wealth in a single day. This cannot be because the AI industry is afraid of more players entering the game. There is already healthy competition among prominent AI companies such as Amazon, Google, Meta and OpenAI — all of which are U.S.-based. Could it be because of DeepSeek's performance? Probably not, because initial experiments show that DeepSeek's performance for most users is on a par with ChatGPT. But again, Gemini and Claude are also on a par with ChatGPT so this is not new either. If DeepSeek offers good value at a reasonable price and was developed using significantly fewer chips and is more efficient to run, resulting in a reduced environmental impact, shouldn't we all be happy? Perhaps what makes DeepSeek different is that it came from China. If we believe in free markets and the survival of the most efficient processes, it is only fair to consider DeepSeek a success story in technology, business and long-term vision. However, because of DeepSeek's country of origin, some fail to see it as a success story. This is a clear violation of modern sensibilities regarding respect for others and their achievements and demonstrates traces of conspiracy theories that will ultimately backfire and hinder the success of the American technology sector. As long as China is seen as an enemy on all fronts, and not a successful competitor in the technology sector with long-term vision and plans, the American tech sector will fail to recognize its own flaws and shortcomings. China has shaped its foreign policy strategy toward the U.S. primarily around technological competition. Unlike Russia, which prioritizes military capabilities, or the European Union, which focuses on economic rivalry, China sees technology as its key battleground. And to their credit, when exploring the facts rather than rhetoric, it is evident that China is executing this strategy efficiently and deliberately. For example, China's investment in technology infrastructure has increased significantly since 2013, when the Made in China 2025, or MIC25, initiative was adopted. MIC25 is a 10-year ambitious plan aimed at catapulting China into a global leader in high-tech industries by reducing reliance on foreign technology and developing 10 high-tech industries such as AI, advanced robotics, telecommunication and aerospace engineering. As such, DeepSeek's success should be seen as part of a much bigger trend that will challenge the U.S. and its technology sector in the next few years. Reflecting only the perspective of technology development, whether the Chinese developers used sanctioned Nvidia chips or employed ChatGPT's design and content to train DeepSeek are both secondary. Especially given that OpenAI, Amazon, Meta, X and other American AI developers do not have clean legal, social and environmental records either. Furthermore, ethical standards of American AI companies — especially in terms of used sources, transparency and reliability — have been questioned for a long time, but until now not much has changed, as demonstrated by the ongoing New York Times lawsuit against OpenAI. From a business and financial point of view, losing clientele to DeepSeek should be investigated systematically with a view to understanding user needs, and scapegoating will never help this process. Indeed, antagonizing the competition prevents U.S. companies from learning from their mistakes. The point that matters the most about DeepSeek's success is that it is much cheaper, uses less energy and offers open model architecture and open weights — both of which are treated as trade secrets in systems like ChatGPT and Gemini. To better understand DeepSeek and China's success from a technology perspective, let's consider a technology that was championed in the U.S., namely the internet. In the 1970s and 1980s, networking technologies were being developed globally, but many were proprietary and costly, such as France's Minitel system, which provided services such as online banking and shopping before the internet. However, the U.S. Department of Defense (through DARPA — Defense Advanced Research Projects Agency) pioneered Transmission Control Protocol/Internet Protocol, known as TCP/IP, which became the foundation of the modern internet. Unlike the proprietary systems, TCP/IP was openly shared and freely modifiable, enabling rapid adoption, innovation and decentralization. This openness led to the explosive growth of the internet and allowed U.S. companies — such as Cisco, Microsoft and later Amazon and Google — to dominate the digital economy. One might interpret the success of TCP/IP as part of a conspiracy, a manifestation of American hegemony and military ambitions, suggesting it was part of a long-term plan to dominate and manipulate global communications. However, from a history of technology perspective, TCP/IP represents a remarkable success story, which was developed by visionaries. Indeed, developers of TCP/IP had a clear vision and worked hard to turn it into an international success. DeepSeek, too, is a technological success story and should be understood in this light. Only then can the American technology sector learn from its mistakes and the competition, and succeed. Mohammad Hosseini, Ph.D., is an assistant professor in the Department of Preventive Medicine at Northwestern University's Feinberg School of Medicine.
